The Government Rationale on Energy Efficiency is Flawed

Ted Gayer discusses a paper recently published by Mercatus (PDF) explaining the flaws behind the government rationale for current energy and environmental regulations proposed or enacted by the departments of Energy and Transportation and U.S. EPA. Gayer finds that that the preponderance of the benefits associated with these regulations stems from private benefits to consumers of lower energy costs, which is based on the agencies’ poorly-supported assumption that consumers and firms make irrational purchasing decisions. Without these benefits, the regulatory costs greatly exceed the benefits, and the environmental benefits of these regulations are minor.